How Do You Value Your Business?

There are three approaches to value your business. The first is the Asset approach, the second is the Market approach and finally the income approach. Under the Asset approach, value is based on the cost of replacement of tangible assets in like-kind condition. In this was the value of the business will be the value of its tangible assets that is if the earning of the business does not support a value greater than the asset. In the Market approach, value is derived from the earnings, sales and assets of all the past transactions of the business. And in the Income approach, value is derived by converting some of the earnings into a value using the capitalization rate, discounts rate or rate of multiple values.